Sequence alignment has become one of the essential bioinformatics tools in biomedical research. Existing sequence alignment methods can produce reliable alignments for homologous proteins sharing a high percentage of sequence identity. The performance of these methods deteriorates sharply for the sequence pairs sharing less than 25% sequence identity. We report here a new method, NdPASA, for pairwise sequence alignment. This method employs neighbor-dependent propensities of amino acids as a unique parameter for alignment. The values of neighbor-dependent propensity measure the preference of an amino acid pair adopting a particular secondary structure conformation. NdPASA optimizes alignment by evaluating the likelihood of a residue pair in the query sequence matching against a corresponding residue pair adopting a particular secondary structure in the template sequence. Using superpositions of homologous proteins derived from the PSI-BLAST analysis and the Structural Classification of Proteins (SCOP) classification of a nonredundant Protein Data Bank (PDB) database as a gold standard, we show that NdPASA has improved pairwise alignment. Statistical analyses of the performance of NdPASA indicate that the introduction of sequence patterns of secondary structure derived from neighbor-dependent sequence analysis clearly improves alignment performance for sequence pairs sharing less than 20% sequence identity. For sequence pairs sharing 13-21% sequence identity, NdPASA improves the accuracy of alignment over the conventional global alignment (GA) algorithm using the BLOSUM62 by an average of 8.6%. NdPASA is most effective for aligning query sequences with template sequences whose structure is known. NdPASA can be accessed online at http://astro.temple.edu/feng/Servers/BioinformaticServers.htm.